|HRG GROUP, INC. filed this Form 8-K on 11/22/2016|
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2015 Quarter, primarily due to the impact of four fewer shipping days as compared to the Fiscal 2015 Quarter as well as the exit of unprofitable businesses.
In Fiscal 2016, net sales of $5,039.7 million increased $349.3 million, or 7.4%, as compared to the $4,690.4 million reported in Fiscal 2015. The increase was primarily due to the impact of acquisitions completed in Fiscal 2015, as well as organic growth, which more than offset the impact of $126.2 million in unfavorable foreign exchange. Excluding the impacts of both foreign exchange and $351.8 million in revenue from businesses acquired in Fiscal 2015, Consumer Products revenues increased $123.7 million, or 2.6%, over Fiscal 2015, with higher currency-consistent, organic sales in all product categories as compared to Fiscal 2015 except small appliances.
Gross profit, representing net Consumer Products sales minus Consumer Products cost of goods sold, increased $18.2 million, or 3.9%, to $485.7 million in the Fiscal 2016 Quarter, and increased $249.5 million, or 14.9%, to $1,919.9 million in Fiscal 2016. The increase in both periods was driven by an ongoing shift toward higher margin products. Gross profit margin, representing gross profit as a percentage of Consumer Products net sales, was 38.9% in the Fiscal 2016 Quarter, an increase of 320 basis points over the Fiscal 2015 Quarter due to favorable product mix and improved productivity. In Fiscal 2016, gross profit margin was 38.1%, an increase of 250 basis points over Fiscal 2015 due to improved product mix and the impact of the acquisition in global auto care.
Operating income increased $24.1 million, or 17.9%, to $158.5 million in the Fiscal 2016 Quarter, as compared to the $134.4 million reported in the Fiscal 2015 Quarter, and increased $182.2 million, or 38.4%, to $656.3 million in Fiscal 2016, as compared to the $474.1 million reported in Fiscal 2015. The increase in both periods is primarily due to the higher overall gross profit margins.
Consumer Products adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA-Consumer Products”) was $236.9 million for the Fiscal 2016 Quarter, an increase of 3.3% as compared to the $229.4 million reported for the Fiscal 2015 Quarter, and $952.8 million in Fiscal 2016, an increase of 19.0% as compared to the $800.6 million reported in Fiscal 2015. The increase in both periods was primarily due to the higher overall profitability. The Adjusted EBITDA- Consumer Products margin of 18.9% in Fiscal 2016 reflected the sixth consecutive year of improvement and increased 180 basis points over Fiscal 2015 primarily due to improved mix, the impact of the acquisition in global auto care and operating expense efficiencies.
After the close of the Fiscal 2016 Quarter, on November 14, 2016, Spectrum Brands announced that its Board of Directors declared a quarterly dividend of $0.38 per share on Spectrum Brands’ common stock. This is a 15.2% increase in the quarterly dividend declared as compared to the $0.33 quarterly dividend paid per share in connection with the comparable period in Fiscal 2015. Over the past three years, the quarterly dividend Spectrum Brands has paid to its common stockholders has increased 52%.
Insurance segment revenues of $57.8 million and $150.4 million in the Fiscal 2016 Quarter and in Fiscal 2016, respectively, increased $82.3 million and $249.2 million, respectively, from the $24.5 million loss and $98.8 million loss recorded in the Fiscal 2015 Quarter and Fiscal 2015, respectively. The increase in both periods was primarily due to an increase in the fair value of the underlying securities included in the funds withheld receivables, while the Fiscal 2016 results further benefited from a lesser impact in the current period from credit impairment losses. The increase in fair value was driven by decreasing risk-free interest rates and tightening credit spreads during the periods, which resulted in higher valuations of the fixed maturity securities in Front Street's funds withheld receivables.
The operating loss of $14.2 million for the Fiscal 2016 Quarter reflected a decrease of $24.8 million from the operating income of $10.6 million reported for the Fiscal 2015 Quarter as benefits and other policy changes reserves increased as compared to the Fiscal 2015 Quarter, primarily due to a decrease in the insurance liability discount rate. For Fiscal 2016, the operating loss of $12.4 million reflected an improvement of $56.3 million from the operating loss of $68.7 million reported for Fiscal 2015, as benefits and other policy changes reserves decreased as compared to Fiscal 2015, primarily due to an increase in the insurance liability discount rate.
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